MF Update: Large cap stocks remain favourite in Feb

The month of February 2019 saw a sharp drop in the net inflows into equity MFs including tax savings ELSS. Total inflows for the month of February was Rs. 5,122 crore, lowest in the last two years. The reason for such low inflow was lower sales of equity MFs, which has dropped from Rs. 24,077 crore in the month of August 2018 to Rs. 15,456 crore in the month of February 2019. Redemptions have also lowered in the same duration; however, their rate of change was lower. It has declined from Rs. 15,702 crore to Rs. 10,334 crore.

The story is the same with the balanced funds, which witnessed February as the second consecutive month when there was a net outflow. After witnessing a net outflow of Rs. 952 crore in the month of January 2019, it saw a net outflow of Rs. 1,077 crore in the month of February.

Against all these outflows, inflows through SIP remained intact and were highest ever at Rs. 8,095 crore in the month of February.

Lower inflow has not impacted the mutual fund houses purchases in the Indian equity market. As per SEBI data, Mutual Fund's net purchases of stocks in the month of February was at Rs. 7,020 crore, as compared to a buying of Rs. 6,542 crore reported in January 2019 and Rs. 2,919 crore in the month of December 2018.

According to data compiled by an equity research firm, the bulk of the inflows was invested in large-caps, while mid-caps too received sizeable inflows. About 75 per cent of the inflows were invested in large-caps, about 23 per cent was invested in mid-cap. Small-cap stocks were not favoured much in this month, only 2 per cent of the inflows were invested in these stocks.